Raising the Bar: A New Study Finds That Integrity Problems Can Be Identified Prior to Hiring New Originators. the Study Also Found That Poor Producers Tend to Be Linked to Integrity Issues

Article excerpt

Everywhere I go, whether consulting, training or attending conferences, integrity is being discussed: Who has it? Who lost it? And who is trying to regain it? * The reality of how uphill the battle is to regain integrity is illustrated in the Washington, D.C.--based Gallup Inc.'s annual poll about honesty and ethics in professions. The poll was last conducted in November 2008. Those surveyed were asked to rate the honesty and ethical standards of people in different fields. Bankers posted a 12 percentage point decline (from 35 percent in 2007 to 23 percent in 2008)--the lowest ever registered for any profession since the study was first conducted in 1976. * The November 2008 Gallup poll has bankers, car salespeople and lobbyists fighting for space on the bottom rungs of the list of professions with the most negative images. * How did this happen? The record decline of home values in the United States and the number of underwater mortgages has certainly fueled consumers' pessimism about the integrity of the financial industry. In particular, a lot of cynicism has emerged around how sales forces have sold financial products--especially mortgages. * The challenge faced by many mortgage lenders is simply this, says Paul L. Wyner, senior vice president in the Chicago office of Troy, Michigan-based Flagstar Bank: "When hiring producers, how can we ensure that integrity-based salespeople are selected? Hoping we had the right person is not enough." * "And the bigger issue," says Mike Jablonski, senior vice president and national production manager with BB&T Home Mortgage, Wilson, North Carolina, "is how does the sales organization ensure that integrity is [in place] throughout the company and delivered to its customer base?"

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This article presents the results of a 12-month study that QFS Consulting Inc. performed developing a pre-hire integrity assessment that identifies high-risk integrity sales candidates. At the outset, we sought to determine whether it is possible to identify producers at high risk for integrity issues. And as a result of this study, we can now say this is indeed something we can do.

A brief background

Over the last 10 years, my company has focused on identifying the best practices of top originators and managers, and providing predictive-assessment products that help companies select "above-average" candidates. The results of our various validation studies have been discussed in previous Mortgage Banking articles (see "Stop Talking--Start Doing," June 2008; and "Producing Managers: Time for a Change?," June 2007).

What we learned in the studies is that sales success in retail and wholesale mortgage lending is a function of hiring an individual possessing a certain set of nine personality characteristics. Likewise, top sales managers have 10 competencies that are critical to success in managing sales personnel.

The process of identifying successful producers and sales manager candidates is similar to how FICO[R] scores project the likelihood of loan losses. The analysis is probability based with percentage factors linked with levels of sales performance.

As with FICO scoring, pre-hire assessments are not 100 percent accurate, but they are more precise (70 percent accurate) than hiring from "gut" feelings--the proverbial "I know someone who knows the candidate, and he or she is a good originator or producing manager." The other favorite way used by many hiring managers is to require the previous year's W-2 forms or commission reports with the hope that the production number generated at the prior company will be replicated at the new company.

Screening candidates using a "Facebook" approach, while it may be comfortable to the hiring manager, does not ensure that previous production results will be attained at the new company. The reasons are twofold: 1) the talent needed in a more challenging economic market is more about creating demand than merely possessing customer-service skills and 2) sales organizations operate differently based on their vision, funding, back-office and value system/sales culture. …